Contrary to popular belief, earnings growth has a very low correlation with decadal stock returns. The primary driver is the change in the valuation multiple (e.g., P/E ratio expansion or contraction). The correlation between 10-year real returns and 10-year valuation changes is a staggering 0.9, while it is tiny for earnings growth.

The ratio of leading-to-coincident economic indicators is at historic lows seen only in deep recessions (1982, 2009). However, this may be skewed by the leading indicators' reliance on extremely negative consumer sentiment surveys. This divergence suggests we might be at the bottom of a cycle, not the beginning of a downturn.

Contrary to conventional wisdom, re-accelerating inflation can be a positive for stocks. It indicates that corporations have regained pricing power, which boosts earnings growth. This improved earnings outlook can justify a lower equity risk premium, allowing for higher stock valuations.

A persistent headwind for European markets is the dual impact of rising Chinese competition and weak demand from China. For the past several years, this single factor has been responsible for a staggering 60% to 90% of all earnings downgrades across the European index, particularly hitting sectors like chemicals and autos.

Former BLS Commissioner Erica Groshen explains that data revisions are a designed feature, offering users a choice between fast but less precise initial data and slower but more accurate final data. It's an intentional balance between timeliness and accuracy.

Crossmark's Chief Market Strategist identifies investor complacency as her primary concern. The market's collective belief that earnings will continue to support upward momentum, despite underlying risks, creates a dangerous environment where investors are unprepared for shocks.

Analysts exhibit a predictable pattern: they issue overly optimistic long-term earnings forecasts to maintain good relationships with management, then gradually reduce them as the announcement nears. The final forecast is often slightly pessimistic, setting a low bar for companies to easily "beat," making the process a rigged game.

Despite record market highs, the S&P 500's underlying earnings per share (EPS) have not yet recovered to their peak from early 2022. This "narrative violation" points to a hidden earnings recession for large-cap stocks, a fact that has been masked by market enthusiasm and multiple expansion.

A sharp, V-shaped rebound in corporate earnings revision breadth is a powerful but uncommon leading indicator. It suggests the private economy is decisively exiting an earnings recession and shifting into an early-cycle recovery, often before traditional economic data confirms the trend.